The Georgia Ports Authority (GPA) and South Carolina Ports Authority (SCPA) this week filed an agreement with the Federal Maritime Commission to discuss plans to create a Southern States Chassis Pool Agreement.
The purpose of the agreement is to improve the supply and condition of chassis at their ports.
The agreement, which will go into effect Aug. 2 unless blocked or delayed by the FMC, will permit the port authorities to discuss, evaluate and reach agreement between themselves and with third parties with respect to matters pertaining to the interchange, transportation, use and operation of international chassis and related equipment. The two ports said they may allow additional port authorities to join the agreement.
Griff Lynch, the executive vice president of the Georgia Port Authority, said that while Consolidated Chassis Management’s South Atlantic Chassis Pool (SACP), which covers the states of North Carolina, South Carolina, Georgia and Florida, has about 53,000 chassis, the GPA and SCPA feel there is a need for an additional 10,000 chassis.
“The South Atlantic Chassis Pool was formed in 2006 as a way to more efficiently handle the provision of chassis for the movement of containers in the Southeast. Today, this pool provides about 40 percent of the chassis offered in CCM managed pools,” said Jim Newsome, the president and chief executive of the South Carolina Ports Authority. “While this pool has historically been an effective solution to chassis provision, the current fleet is both aging and has not kept up in size with the growth of containerized trade in the Southeast. Additionally, chassis provision is increasingly fragmented in the market as about 40 percent of the container moves are handled by chassis provided outside of the pool structure.”
Ports in the Southeast have been growing rapidly, in part, because larger locks at the Panama Canal are making it less expensive to move cargo there from Asia. The Southeast is also one of the fastest-growing regions of the country both in terms of population and the economy.
“If you look at the last three years, the volume through the ports has grown by about 30 percent in round numbers and the pool has been increased in size by about 3 to 5 percent, so clearly there’s a problem,” said Lynch.
“Both ports have come together for the betterment of the Southeast,” said Lynch. He said GPA and SCPA also have invited the North Carolina Ports Authority, which operates the Port of Wilmington, and Jacksonville Port Authority to be part of the agreement.
“What we’re shooting for is a seamless process to take the SACP pool and transition it into the Southern States Cooperative Pool,” he said.
To accomplish that, he said the two ports will work with the South Atlantic Chassis Pool, trucker-led North American Chassis Pool Cooperative (NACPC) and Consolidated Chassis Management “to design a transition process which is not fully spelled out.”
He said NACPC, which last month added 1,000 chassis to the SACP, would add 7,000 to 10,000 chassis eventually. Depending on how quickly the plan moves forward, the additional chassis could help alleviate shortages during peak season this year.
Newsome said the pool will be operated by the NACPC, “which is a trucker-centric organization that has focused from its inception on improving the quality of chassis on an at-cost basis.” There are three major goals in this collective effort:
• Significantly improve the quality of the chassis fleet in the Southeast through setting standards in terms of age and attributes, such as radial tires, LED lights and anti-lock brakes.
• Grow the size of the chassis pool to keep up with the explosive growth in containerized trade in the Southeast, both in terms of number of chassis and more realistic trigger levels for the injection of new chassis.
• Provide an “at cost” model per day of use that removes the current economic discontinuities that apparently exist between the various segments in the market that use chassis services.
“The ports would not be operating the pool whatsoever,” but would be on an advisory board, nor would they profit from it, Lynch explained.
As an “at cost” pool, the cost of operating the pool will dictate pricing to the stakeholders and users, he said. Intermodal equipment providers will be willing to provide equipment because “NACPC will have a net lease with the chassis providers so they will be guaranteed a payment per day for the chassis that are in the pool. It does not have to be utilized.”
For example, he said if NACPC leased a container from one of the big intermodal equipment providers such as TOTE, DCLI or FlexiVan, those leasing companies will have fixed income, a guaranteed payment. He also said NACPC would be responsible for chassis maintenance.
The ports said the agreement will cover marine terminals and adjacent space at the ports of the two agencies, as well as inland intermodal terminals and depots — rail terminals, container yards, container freight stations, intermodal equipment storage areas, container depots and similar facilities located in Georgia, South Carolina, Alabama, Florida, North Carolina and Tennessee where chassis are used to transport containers in foreign commerce moving either to or from the marine terminals as well as such chassis moving to or from such inland intermodal terminals and deports.